By Prinz Magtulis (The Philippine Star)
| Updated June 11, 2016 - 12:00am
MANILA, Philippines - Property buyers
and sellers could be subjected to a tax probe to determine their financial
capacity under a new memorandum issued by the Bureau of Internal Revenue (BIR).
Issued less than a month before the new
administration takes over, Revenue Memorandum Order 24-2016 is intended “to
ensure the tax compliance of the parties” involved in property sale and
transfer.
“Parties to the said transactions may be
subjected to an audit or investigation to determine their capacity to hold and/or
acquire properties,” the order dated June 7 stated.
The order covers transactions involving
the payment of capital gains tax on both property and non-traded stocks,
donor’s tax, estate tax, expanded withholding tax, and those covered by
tax-free arrangements under the law.
Internal Revenue commissioner Kim
Henares has not replied to request for comment as of press time.
Benedict Tugonon, president of tax
industry group Tax Management Association of the Philippines (TMAP), said the
new order is “unjust and unfair” to taxpayers.
“Henares should refrain from issuing issuances
now at this point in time, as a courtesy to the new administration,” Tugonon
said in a phone interview.
“We will strongly recommend to the next
administration to include (this) among the issuances that should be withdrawn
or cancelled,” he added.
According to the order, application for
certificate authorizing registration and tax clearance for property sale and
transfer may be evaluated for “possible” audit.
If a buyer is found to not have the
financial capacity to acquire the said property, a letter of authority may be
issued by the concerned BIR revenue district office where the application was
filed.
A letter of authority is issued to
taxpayers being investigated or audited. While such issuance may not stop the
actual sale, Tugonon said it gives taxmen too much discretion.
“This presumes taxpayers committed
fraud. We all enjoy the legal presumption of good faith. Fraud cannot be
justified by mere speculation,” he said.
“BIR examiners (are) given wide latitude
of discretion as to what constitute necessary documents to be submitted to
determine capacity to acquire,” the TMAP official added.
Specifically, Tugonon said it will be
“inconvenient” for those without not required to file income tax returns (ITR)
to prove financial capacity.
Under the memorandum, an affidavit will
be required from the likes of minimum wage earners and even overseas Filipino
workers stating their annual income, source of income and why they are buying
the property.
“The (order) also covers estate tax. How
can the BIR investigate the financial capacity of the deceased when the owner
is already dead?” Tugonon said.
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